Solving the cross-border payments using blockchain - Everex

Wednesday 29 August 2018 | 08:19 AM
CET

Visakha Thongphetsavong, CMO of Everex, shares with our readers how can blockchain be applied to cross-border payments.

But first let’s see who Everex is.

Everex is a blockchain-powered fintech company, headquartered in Singapore with offices in Bangkok/Thailand. The company was founded in 2014 by the CEO, Alexi Lane, a former banker from Morgan Stanley with 15 years of experience within the payments industry, and the co-founder and CTO, Alexander Kakunov, a software engineering professional with over 15 years of expertise. As both of them discovered the powerful benefits of the blockchain technology, they have decided to create a venture in the fintech space deploying distributed ledger technology for real-world use cases.

Thus, Everex enables transparent cross-border financial transactions, bringing individuals and SMEs - with or without bank accounts - into the new global economy powered by the distributed ledger technology. The blockchain technology eliminates the need of any third-party or central authority for financial transactions, by encrypting and storing transactions in participants’ account ledger, making it almost impossible to tamper.

The fintech’s main product is a blockchain-based mobile wallet which enables end users to instantly convert and send money abroad – for which the company offers a white-label solution to any interested parties like banks, central banks, and many others, which offer cross-border money transfers.

Furthermore, Everex deploys the blockchain technology using smart contracts to digitise national fiat currencies in order to enable instant money transfer over the blockchain. The fintech has created a price-stable coin called eFiat which is a full representation of a national currency on the blockchain, fully-pegged by its fiat value (meaning that 1 EUR = 1 eEUR). This solution enables cryptocurrency exchanges to better deal with their liquidity and cash-in/cash-out options.

Another Everex’s suite of products include Ethplorer which is currently gathering more than 10 million visitors per month, and is the backbone technology of the company’s blockchain-powered e-wallet, Everex.cash.

Currently, the company has signed a solid partnership with a banking partner, to accelerate financial inclusion of a proportion of the 2 billion unbanked population, helping migrant workers send money back home and save huge amounts in transaction fees.

What are the benefits of using blockchain for cross border payments?

There are three main benefits of the blockchain technology:

Blockchain money transfer is cheaper

Sending money from one country to another can be an expensive option.

Often, banks in different countries have no direct relationship. As a result, one or more intermediary banks must facilitate an indirect transfer. The intermediary bank charges a fee, which is usually deducted from the total transfer amount. An indirect transfer can also take up to three to five business days to complete. Currency exchange adds yet another layer of cost to the transaction.

Fees associated with international money transfer generally fall between 5% to 20% of the transaction. Blockchain can reduce the total cost to about 2% to 3% of the transaction.

Blockchain money transfer is faster

Besides the cost, international money transfer can be a time-consuming process.

According to Deloitte, an indirect transfer can take up to three to five business days to complete. Blockchain technology allows real-time money transfer between any two parties.

Blockchain money transfer is safer

The encryption feature of blockchain provides security and an easily-verifiable public audit trail. Better security means less of the economic crime and fraud that runs rampant in the traditional banking industry, which drive up regulatory costs that ultimately are passed along to consumers. Consulting company Capgemini estimates that consumers could save up to USD 16 billion in banking and insurance fees by using blockchain-based smart contracts.

Blockchain’s decentralized nature not only makes it impossible to unilaterally modify the original contracts it records; it also makes it less vulnerable to system failures and hacking. Traditional payment systems, have already been victim of several significant hacks by cybercriminals.

What about the challenges in acquiring market adoption?

The biggest challenges we faced when we were amongst the first in the market – 2014/2015, was the global acceptance and understanding of the blockchain technology. Many third parties, including governments and regulators, didn’t trust the benefits and future of the technology back then. Today, more and more institutions start understanding the technology and have more confidence with its advantageous.

As a result, back then, our main goal wasn’t to build up the business given the low rate of acceptance of the technology, but to mostly educate our potential partners, regulators and governments about how beneficial and transformative the technology can be. We initially started sharing our hands-on knowledge and developed commercial testing for a better understanding of the technology.

Today we believe the market is more mature then it was years ago when we first started and that a global adoption has finally reached an acceptable level for the blockchain to be deployed openly. Banks have started exploring the benefits of the technology, regulators and governments are setting up sandboxes. We are very much confident the blockchain technology will become a powerful tool for a transformative move.

What issues in the money remittances market is blockchain trying to solve?

Currently, the traditional way of sending money abroad is quite slow, inefficient and very costly. According to our research and findings, most of the people who do not have access to financial services send money abroad through Western Union. However, Western Union charges exorbitant fees and the process is also time consuming. For those who send money through their bank, the transfer fees are even higher, and it takes time for money to arrive to destination.

The cryptocurrency landscape always deals with trust issues, focusing on compliance, security, and data protection. How do you secure that trust with your customers?

We are taking trust and security very seriously across all our product offerings. Security, transparency, speed and cost are our four core pillars at Everex. Our business model is built such as the company actually never touches the money, so an additional counterparty risk is eliminated from the process. That is why Everex is only working with licensed financial institutions who have the right to keep the money.

In addition, the information of money is always safe, since the data is transacted through the blockchain technology which is basically immutable and highly secured.

About Visakha Thongphetsavong

Visakha Thongphetsavong is a former Associate - Investment Banker from Credit Suisse Zürich/London. Visakha co-founded various fintech startups before joining Alexi (CEO Everex) and his blockchain venture. Currently, she is the Chief Marketing and Business Development Officer at Everex. Visakha has strong understanding of the crypto market and the utilization of the blockchain technology within the fintech space, and she is also one of the very few young women executive members within the blockchain industry.